Some of it depends on what you want in the car...
So uh, you realize there's so much you're not telling us and we're not telling you? Are you building for all out performance? Style?
The IRS of the MK5 handles better than any MK4 (except R32). MK5's are newer, less wear and tear. The later models have the superior 2.0t tsi (early model fsi's had the cam follower problem).
I'm a MK4 guy, I know them well, but the MK5 all around is a more superior product.
And I hope you mean H2O, because waterfest is another year away...
and yes i did mean waterfest because, sadly, i doubt i can get too much done with the money i have before h20